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Editorial

Thus spake Prez

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Thursday 9th February, 2023

President Ranil Wickremesinghe, who presented his government’s policy statement in Parliament, yesterday, sounded like a seasoned insurance sales agent with glib phrases rolling off his experienced tongue; he sought to scare the public and infuse them with hope, at the same time, to sell his policies. The knee-jerk reaction of the Opposition was to denounce the President’s address as snake oil, but it, in our book, is not devoid of substance and deserves critical appraisal and not cynical dismissal.

The President’s speech touched on many things. It contained a promise to build a secure future for the youth, and a boastful claim that when Wickremesinghe took over as the President there had been queues for essential commodities but now there was economic stability and the people were comfortable. This ‘improvement’ is not due to the government’s competent handling of the economy. Thanks to the country’s shameful debt default, some forex is now available for essential imports, and fuel rationing has helped contain the petroleum crisis to some extent. This cannot be considered an achievement by any stretch of the imagination.

President Wickremesinghe also preened himself on the fact that the government had been able ‘to increase the foreign reserves which had fallen to zero up to USD 500 million’. This certainly is no mean achievement, but the blame for the present forex crisis should be apportioned to the President and his party. The Exchange Control Act of 1953 helped prevent questionable forex outflows; it made violations thereof non-bailable criminal offences. Exporters were required to bring back an equivalent of foreign exchange of the worth of their exports, or more, via the banking system, and the properties of the offenders were confiscated. In 2017, the UNP-led Yahapalana government replaced that law with the Foreign Exchange Act much to the detriment of the country’s interests, and the new law has stood foreign exchange racketeers in good stead and contributed to the current forex crisis. If the country’s foreign reserves are to be built significantly, the Exchange Control Act will have to be restored. It is hoped that the IMF will pay attention to this pressing need.

President Wickremesinghe, yesterday, tried to justify the controversial tax increases that have driven workers to protest. He would have the public believe that the measures his government had adopted to increase its tax revenue were in keeping with some recommendations made by the Sri Lanka Administrative Service Association—reintroduction of PAYE, making all officers of state enterprises pay taxes from their salaries and not through their institutions and employers, reintroduction of withholding tax, suspension of all tax exemptions and revision of the income slabs for taxation and the level of turnover subject to VAT.

Those who are protesting against tax increases are not refusing to pay taxes. Given high inflation, after tax deductions and the payment of loan installments, they are left without any money to feed and clothe their family members. They are demanding that taxes be brought down to affordable levels. Another reason for their protests is rampant corruption as well as the culture of impunity, which enables politicians and their kith and kin to help themselves to public money. Members of the political families are living the high life without any legitimate sources of income while the people are paying taxes and struggling to dull the pangs of hunger.

The President, yesterday, dangled a carrot while claiming that he did not engage in populist politics. He said the government would be able to ‘give an additional allowance to public servants in the third and fourth quarters of the year, and grant concessions to the private sector’. The public sector has about 1.7 million workers although the country can manage with half that number. The President is offering to grant them an allowance despite the economic crisis!

It is widely believed that the present economic crisis could have been averted if IMF assistance had been sought in time. President Wickremesinghe’s policy statement endorses this view. The President said: “We left the IMF in 2020. That short-sighted decision has also affected the current situation. Bangladesh was able to obtain IMF assistance early, as they had continued to be in that process. We had to initiate the process from the beginning. However, amidst all the difficulties, we started this journey.” Interestingly, the President has contradicted former Finance Minister Basil Rajapaksa albeit unwittingly. Rajapaksa said in a recent television interview that the SLPP government had been in touch with the IMF throughout, and there had been no delay in seeking the latter’s assistance.

President Wickremesinghe also promised less government. He said the strategy of the government should be to guide the private sector in business activities while being in the background. He will not find it difficult to sell this idea, given people’s resentment at the ever-burgeoning public sector, and the sheer number of loss-incurring state-owned ventures.

One wonders whether President Wickremesinghe, who should remain maniacally focused on reviving the economy, has sought to bite off more than he can chew. He has undertaken to implement the 13th Amendment fully, introduce a host of other laws and set up countless institutions. Yesterday, he promised maximum devolution within a unitary state. This can be taken as a pledge to implement the 13th Amendment fully, and the government is bound to have more problems to contend with on the political front.

The President called for unity and a concerted effort to expedite economic recovery. It behoves everyone to heed this call. But the government, for its part, ought to abandon its confrontational approach, learn to tolerate dissent and, above all, extend the hand of friendship to its political opponents, warring trade unions, etc.



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Editorial

Trump’s pound of flesh and bleeding nations

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Friday 4th April, 2025

US President Donald Trump has jacked up tariffs on imports in the name of making America wealthy again. Yesterday, he signed an executive order, with his usual melodrama, increasing tariffs on goods imported from many countries including Sri Lanka, which will now have to pay as much as 44% by way of tariff on its exports to the US. Claiming that the unprecedented tariff hike is a reciprocal measure, Trump has said the new 44% tariff is in response to Sri Lanka’s 88% trade barriers on American goods. It is a case of a giant competing with a dwarf!

Powerful nations are resilient enough to absorb the US tariff shocks, but the weaker economies like Sri Lanka are bound to reel and even go into a tailspin, causing further destabilisation of the developing world. The US tariff hike will deal a body blow to Sri Lanka’s export sector, especially its garment industry, which is showing signs of recovery. Sri Lankan goods, especially garments, will now be less competitive in the US market. Other Asian garment exporters, such as India, Bangladesh and Vietnam, also have higher US tariffs to contend with but not to the same extent as Sri Lanka. There’s the rub.

A drastic decline in export earnings due to the new US tariffs will invariably lead to a decrease in Sri Lanka’s foreign currency reserves, causing a further depreciation of the rupee, an increase in inflation, job losses, and even socio-political upheavals unless the US takes the fragile condition of the Sri Lankan economy and softens its stand.

President Anura Kumara Dissanayake has appointed an expert committee to study the economic fallout of the US tariff hike and recommend remedial measures. This is a step in the right direction, and it is hoped that the government, together with all other stakeholders, will be able to formulate a mitigatory strategy to cushion the impact of the new US tariffs on the local industries and the ailing economy. Most of all, the government will have to manage the country’s foreign currency reserves frugally.

What the US can gain from the unprecedented hike in tariffs on Sri Lankan exports is negligible, and it will not give any significant boost to the US economy or industries. Is Washington trying to leverage Sri Lanka’s overdependence on the US as an export destination to further its geopolitical interests in a bigger way? Is the Trump administration goading Sri Lanka into a situation where the latter will be left with no alternative but to agree to anything including controversial agreements, owing to its sheer desperation to have the US tariffs on its exports reduced?

If what Trump said, while announcing the new tariffs is anything to go by, he wants to make America wealthy again by creating conditions for the domestic industries to be ‘reborn’. But he has apparently ignored factors like stringent environmental laws, higher cost of domestic labour, increases in raw material costs due to new tariffs, technological competition, etc., which will stand in the way of the US in achieving his dream.

Whether Trump will be able to realise his MAGA (Make America Great Again) goal by resorting to ruthless actions that weaken the economies in the developing world may be in doubt, but one possible outcome of his tariff war, as it were, is not difficult to predict. Extremely high tariffs the US has imposed on imports are at variance with the liberal economic principles and policies it has long championed. Such excessively protectionist measures could undermine America’s global dominance, driving smaller nations to gravitate towards its rivals in search of favourable trade terms. Russia lost no time in offering to help Sri Lanka’s export sector. Other powerful nations are likely to follow suit where the developing countries troubled by the US tariffs are concerned.

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Editorial

A welcome judgment

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Thursday 3rd April, 2025

Justice finally caught up with former North Central Province Chief Minister S. M. Ranjith and his sister-in-law Shanthi Chandrasena yesterday, when the Colombo High Court (HC), which heard a case filed by the Commission to Investigate Allegations of Bribery or Corruption (CIABOC) against them in 2021, sentenced them to 16 years RI for having misappropriated Rs. 2.6 million between 2012 and 2014. They were also fined Rs. 200,000 each. The HC judgment must have gladdened the hearts of all those who long for an end to corruption.

The criminal misappropriation of state funds at issue happened during the heyday of the Rajapaksa rule, which became a metaphor for corruption and abuse of power. When politicians are intoxicated with power, they become blind to the consequences of their actions, and enrich themselves as if there were no tomorrow. They usually cover their tracks, but the January 2015 regime change may have prevented CM Ranjith and his sister-in-law, who was his private secretary, from doing so. Their offence, however, pales into insignificance in comparison to what some other members of previous governments have been accused of. Unfortunately, most of those allegations have gone uninvestigated, or escape routes have been opened for the accused in some high-profile corruption cases, which were made to collapse, much to the dismay of anti-corruption campaigners and the public. Thankfully, most of those characters failed to get re-elected last year, and this is something the NPP government can flaunt as an achievement.

Another former Chief Minister––Chamara Sampath Dassanayake––has been remanded for causing a huge loss to the Uva Provincial Council by withdrawing six fixed deposits prematurely in 2016. It is hoped that all allegations of corruption, abuse of power and serious crimes such as murder against the members of previous administrations will be probed thoroughly and the culprits prosecuted expeditiously.

Corruption usually thrives under powerful governments in this country because huge majorities tend to nurture impunity. Integrity of most Sri Lankan politicians is a mere result of the unavailability of opportunities to line their pockets rather than an unwavering commitment to moral principles. Power tends to have a corrosive effect on scruples, and many self-proclaimed champions of good governance, who come to power, vowing to rid the country of corruption, end up being as corrupt as their predecessors. What we witnessed following the 2015 government change is a case in point. The ‘paragons of virtue’ in the UNP-led Yahapalana camp committed the first Treasury bond scam a few weeks after being voted into power. The present-day leaders who are campaigning hard against corruption were on a political honeymoon with the UNP at that time, and their alliance lasted until the end of the Yahapalana government in late 2019 despite very serious allegations of corruption against that administration.

There is nothing stupider than to rely on individual politicians to rid the country of bribery and corruption. They may have allegations of corruption against their political rivals probed, but it is doubtful whether they are serious about eliminating bribery and corruption. One may recall that having come to power by campaigning mainly on an anti-corruption platform, in 1994, the SLFP-led People’s Alliance government, ably assisted by several other political parties, including the UNP and the JVP, effectively deprived the national anti-graft commission of its suo motu powers, making it dependent on formal complaints to take action. Hence the need for anti-corruption laws with stronger teeth and robust institutional mechanisms to battle bribery and corruption. All existing anti-corruption mechanisms should be given a radical shake-up.

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Editorial

Another Mafia

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Wednesday 2nd April, 2025

Petrol was unavailable at some filling stations yesterday as their stocks had not been replenished in anticipation of a petrol price reduction. The government reduced the prices of petrol by Rs. 10. Long lines of vehicles were seen near the fuel stations where petrol was available. Some people delayed refuelling their vehicles until the announcement of the monthly fuel price revision, expecting substantial fuel price reductions in view of the upcoming local government (LG) elections. That too may have led to a marginal increase in the demand for fuel yesterday morning.

There have been numerous instances where speculation of downward price revisions led to fuel shortages. Fuel retailers have become a law unto themselves and do not care to maintain adequate petroleum stocks. A similar situation is bound to occur early next month as the government is expected to decrease fuel prices in view of the upcoming local government elections. So, precautions will have to be taken to foreclose such an eventuality.

There is a pressing need for stringent regulation of fuel retailing to ensure that all filling stations maintain petroleum stocks at the stipulated levels. Noncompliance should result in penalties. Previous governments gave filling stations owners kid-glove treatment for obvious reasons; it was only the businesspeople with political connections who could establish fuel stations, and some of them were family members of politicians. Those who voted the NPP into power expected their interests to prevail over those of unscrupulous businesses, such as rice millers, and fuel retailers, but sadly the status quo remains. NPP leaders flex their muscles and order pre-dawn raids on peaceful protesters just like the Rajapaksa-Wickremesinghe government, but they have no qualms about kowtowing to the exploiters of the public!

Meanwhile, filling stations, save a few, have earned notoriety for various malpractices such as meter tampering and pumping in bursts. Regulatory authorities do precious little by way of conducting regular inspections and calibrations of fuel dispensers, making one wonder whether they are in league with the unscrupulous fuel retailers. The government must put its foot down and take action to safeguard the interests of the public and ensure that fuel consumers get their money’s worth without hassle.

Propaganda and reality

The NPP government has pulled out all the stops in a bid to win the upcoming local government (LG) elections. While it is leveraging everything at its disposal to achieve that end, its propagandists are claiming that it needs to have control of all local councils to be able to serve the public better. They would have the people believe that the JVP/NPP is not controlling the LG institutions at present. But this claim does not bear scrutiny.

Local councils have remained functional although they are without elected representatives. They have been under Special Commissioners (SCs). The SCs report to the Provincial Governors, who are appointed by the President. Thus, all local councils are currently under President Anura Kumara Dissanayake for all intents and purposes.

One can understand why the NPP is campaigning so hard to bag the local councils. It wants to win the mini polls and cement its impressive victories in last year’s national elections. However, the argument that unless the people vote for the NPP overwhelmingly again, enabling it to gain control of all LG institutions, it won’t be able to carry out its pledges, is flawed. That is a propaganda lie.

One may recall that the Colombo Municipal Council remained under UNP control during the UPFA and SLPP governments, but that did not stand in the way of the development of the City of Colombo. The JVP won the Tissamaharama Pradeshiya Sabha in 2002 while the UNP was controlling Parliament and Chandrika Bandaranaike Kumaratunga was holding the executive presidency. Governments have to come to terms with such situations.

All signs are that the government and the Opposition will have to cooperate in many LG institutions, after the upcoming mini polls, for those councils are very likely to be hung.

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